Queenscourt Limited v The Commissioners for HMRC

Permission to appeal should be granted where a proposed ground is arguable, with a realistic prospect of establishing a material error of law in the First-tier Tribunal’s decision. In a legitimate expectation case, the assessment of conspicuous unfairness is not confined to the claimant’s financial detriment. The court may also need to consider whether allowing a public authority to depart from an earlier position is conducive to good administration.

Queenscourt Limited applied for permission to appeal against the decision of the First-tier Tribunal (Tax Chamber), published as [2024] UKFTT 460 (TC). The FTT had rejected the company’s legitimate expectation arguments concerning HMRC’s decision to recover VAT which it had previously agreed to repay.

The FTT granted permission on several grounds but refused permission on the ground concerning the treatment of detriment. The Upper Tribunal initially refused renewed permission on paper, but reconsidered the application orally. The issue was whether the FTT had wrongly confined its legitimate expectation analysis to financial detriment and failed to consider whether HMRC’s departure from its earlier decision was conducive to good administration.

1. The application for permission to appeal was granted on the ground identified at the oral reconsideration. The relevant question was whether the proposed ground was arguable, with a realistic prospect of demonstrating a material error of law in the FTT’s decision.

2. Section 11(1) of the Tribunals, Courts and Enforcement Act 2007 provides a right of appeal to the Upper Tribunal on any point of law arising from a decision of the First-tier Tribunal. Permission is therefore appropriate only where the proposed ground meets the required threshold of realistic arguability and materiality.

3. The Applicant argued that the FTT had erred at paragraph 214 by treating detriment as a factor in deciding whether the threshold of conspicuous unfairness had been reached. The argument was clarified at the hearing: the alleged error was that the FTT had considered only the financial detriment suffered by Queenscourt and had omitted the separate consideration that permitting HMRC to resile from its earlier decision would not be conducive to good administration.

4. That contention was realistically arguable. If the additional factor had been considered, the FTT might have concluded that it was conspicuously unfair for HMRC to depart from its October 2019 decision to accept the repayment claim for overpaid VAT. The Upper Tribunal did not determine the substantive legitimate expectation issue, but granted permission to appeal on this ground.

• Upper Tribunal (Tax and Chancery Chamber): Permission to appeal granted on one ground following oral reconsideration.
• First-tier Tribunal (Tax Chamber): Decision released on 3 June 2024, published as [2024] UKFTT 460 (TC). Permission to appeal was granted on various grounds and refused on the ground concerning the legitimate expectation analysis.